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Friday, December 24, 2010

Food Price Inflation Hidden in Packaging

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food-inflation-hidden-in-smaller-packaging


Food Price Inflation. How long can food companies continue to hide inflation using their food packaging schemes?
It seems to us, at least where we live, that not only are food prices in general continuing to creep higher, but the packaging is cleverly getting smaller.
It’s almost like the reverse of how you don’t seem to notice your child growing bigger and taller, because it happens so slowly. Then one day, you suddenly notice how junior has grown.
Well, conversely, junior is shrinking when it comes to food packaging. Every once in a while, when grocery shopping, you pick up that package of xyz and you say to yourself, this box seems smaller than before!


The other day while shopping, I had noticed a brand of peanut butter that I had not seen displayed in a long time. Since I remember that I liked the taste of that brand years ago, I decided to splurge and buy it to see if it still held up to my recollection. I remarked to my wife how the price seemed not bad… until I picked it up and realized that the jar was smaller than it should be for that typical size-range that we were used to. I instantly could “tell” that the diameter of the jar was smaller than before.


Foods used to be packaged in sizes that were “even” ounces, or whole-number sizes that made sense like 16 oz. or 12 oz. etc…
Now, not only are there all sorts of odd sized packaging, but now you commonly see decimals! What is the sense of 14.3 ounces? The answer is, it makes sense to the bean counters at the food corporation to increase their profit margin, or to keep up with their own increased costs of production! Most likely that product used to be in a 16 ounce package. Packages are getting smaller and smaller.


Now lets do the math. Lets say that product xyz is priced $3.00, same as it was 4 months ago. However instead of being packaged in a 16 ounce container, now it is only 14.3 ounces. Some people may not even notice the small change in weight because of the clever way that the container and label are redesigned to “appear” that it hasn’t changed. Clever corporate marketing.
Well, that difference in weight (1.7 ounces) equals a 10 percent food price increase! Even with only a 1 ounce reduction of a 16 ounce package equals a 6 percent food price increase! This is a major way in which food companies have been hiding food price inflation.


Now, not only are the packages getting smaller, but they are raising food prices. That $3.00 xyz product not only went up 10 percent because of a downsized package, but they raised the price to $3.29, an 8 percent increase! Between the packaging change and the price increase, the food price has gone up 18 percent!
Another way of saying this is that the purchasing power of your dollar has decreased by 18 percent.


Now that we see what is happening with food prices, what is the best thing we can do?
Answer: Be aware of the corporate schemes and buy more food now, rather than later, because this will not stop.


The current economic mess and massive debt load of the USA and many other countries of the world is resulting in a purposeful faster devaluation of the currency. Without getting into the details of that, suffice it to say that inflation is here, and is going to get much worse in the future.
Stock up on food now. It makes financial sense. It makes preparedness sense.






Update,
Corporate scheming, trimming, squeezing, downsizing, profit optimizing, is nothing new. With regards to food packaging however, and although some may argue that food price inflation is tame, in my opinion the pace has increased of late, or at least I’m noticing an increase – like realizing that junior is growing up…
One danger I worry about with regards to foods and corporate optimization, are the substitutions that are put in food products in place of “real” food substances. We know it’s happening, and despite what the FDA says, it can’t be good. But that is for another post.
Most of us are used to seeing the “tags” on the grocery store shelves with the food, the ones that sometimes show price per unit. I say “most of us” and “sometimes” because it is not always the case. Evidently laws vary from state to state and certainly from country to country. All you can do is the best you can, try to determine the price per unit to compare and find a best deal.
Having said that, I have seen tags that indicate price per ounce (I like that) while others indicate price per serving (I do not like that), and still others do not indicate a price per unit at all (I definitely don’t like that). Foods priced on servings vary wildly and require a calculator to figure it all out at the grocery store – how annoying.
Soon enough, peanut butter will be sold in one-serving squeeze tubes instead of 18 ounce jugs, but will still cost you $3.00. That goes for the other food stuffs too (just using PB because it’s what set me off this weekend).


See who controls the food supply: List of Top 50 Supermarket Grocery Chains



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